naruc electric vehicles and performance-based regulation

NARUC Electric Vehicles and

Performance-Based Regulation

State Working GroupsDECEMBER MEETING

DECEMBER 15, 2020

Welcome

Moderator: Commissioner Bocanegra, Illinois

Panelists

• Megan Anderson, Regulatory Assistance Project

• Ed Burgess, Vehicle Grid Integration Council

• Raghusimha Sudhakara, Con Edison

AGENDA (Eastern Time)

3:00 PM Welcome and Introductions (5 minutes) • Agenda review

• Roll call, by state

3:05 PM Presentation and Q&A: Regulatory Assistance Project (15 minutes) Megan Anderson, from the Regulatory Assistance Project will provide an

overview of opportunities for PBR in transportation electrification, and

discuss RAP’s Metrics to Measure Effectiveness of Electric Vehicle Grid Integration

report.

3:20 PM Presentation and Q&A: Vehicle Grid Integration Council (15 minutes) • Ed Burgess, Policy Director of the Vehicle Grid Integration Council, will

discuss a case study from National Grid and lessons from California.

3:35 PM Presentation and Q&A: ConEdison (15 minutes) Raghudimha Sudhakara, Director of Demonstration Projects and Energy

Efficiency Strategic Channel Engagement at Con Edison will discuss the utility’s experiences and lessons with PIMs for EVs in New York.

3:50 PM Q&A (10 minutes) • Speakers will take additional questions from working group members

4:00 PM Closed Door Discussion (28 minutes) • Working group members will discuss their own views and the actions their

states have taken to date.

4:28 PM Next Steps and Announcements (2 minutes)

4:30 PM Adjourn

Roll Call – Read from Webinar

EV and PBR Working Group MembersStates:

Arizona

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Illinois

Kentucky

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Nevada

New Jersey

New York

North Carolina

Ohio

Oregon

Pennsylvania

Puerto Rico

Rhode Island

South Dakota

Texas

Utah

Vermont

Washington

Wisconsin

National/Federal Partners:

NARUC

NRRI

U.S. DOE

National Labs

U.S. EPA

Megan Anderson

Associate

Regulatory Assistance Project (RAP)®

Taos, New Mexico +1 802 498 0736

[email protected]

raponline.org

December 15, 2020

NARUC Webinar: PBR for Transportation Electrification

Using PBR for Electric Vehicle Grid Integration

1 EV Opportunities and Challenges


• Transportation sector is the largest share of

greenhouse gas emissions in the U.S. (28%)

• Light duty vehicles make up a large share (59%)

• Medium and heavy-duty trucks (23%)

• Total = 82%

• Electrifying vehicles could address ~ 23% of U.S.

GHG emissions if aligned with clean charging

opportunities

7

Electrifying vehicles = emissions reductions


• 1,000 miles/month @ 25 mph average = 40 hours

• Driven: 40 hours/month

• Charging: 40 hours/month

• Parked: 680 hours/month

8

EV Charging Opportunity

Challenge: How do we align those charging hours (and maybe even parked hours) with efficient or optimized grid operations?


• EVs offer a new flexible load that can be

integrated into the electric system in a way that

maximizes benefits for both EV users and grid

operators.

• But if not well aligned, EVs can exacerbate peak,

increasing costs and emissions

• So how do we ensure that EVs are integrated to

benefit the grid?

9

Aligning the EV opportunity

Performance-Based Regulation

10


• A means by which regulators can align utility

incentives with policy-mandated goals (improved

reliability, deployment of DERs, EE, and EVs)

• Stands in contrast to traditional cost-of-service

regulation, where incentive for utility is to increase rate

of return by increasing sales and investments

Performance-Based Regulation (PBR)

11


• Good things that are not profitable for the utility that don’t

get done (Non-wires Solutions, aggregated DERs)

• Bad things that are profitable to the utility that should be

prevented (Gold-plating physical assets)

• Bad incentives not easily seen (Deferring expenses like

tree trimming, customer care, underserved communities)

12

PBR May Help Overcome Bad Outcomes


• Guiding goals

• Understand Current Incentives

• Develop Measurable performance criteria

• Metrics

• Outcomes

Performance-Based Regulation Steps


Photo: Heidi Sandstrom

Set Guiding Goals

Examples:

• Make/keep energy affordable for customers

• Increase efficient EV charger deployment

Understand Current Incentives

Regulatory Assistance Project (RAP)® 16

Examples:

• Declining customer bills

Develop Measurable Criteria


Photo: Shirley Niv Marton

Establish Metrics

Example:

• 2% reduction in average monthly residential bills

• 5% improvement in SAIFI from baseline value

Applying PBR to EV Integration 3


• What are the carbon and pollution reduction goals

of the jurisdiction?

• What is the goal of supporting EV build-out? (to

serve customers, EV opportunities in underserved

communities, grid stability?)

• What education and outreach activities are most

helpful for agencies, utilities, car dealerships, car

manufacturers and other entities?

Questions regulators can ask when thinking about PBR and EVs


1. Circuits and feeders with excess seasonal or year-round

daytime capacity to accommodate charging load at peak.

2. The elasticity of demand for on-peak charging versus off-

peak charging by charger installation use (residential,

commercial/retail, commercial/fleet, municipal/fleet).

3. Average and median utility/ratepayer cost for installation

of charging infrastructure by charger installation use as

well as by charger and charging station.

4. Utilization of chargers by charger, charging station and

charger installation use.

20

Useful Data


1. Build understanding of EV charging costs,

benefits and consumer savings

2. Encourage the development of EV infrastructure

while controlling costs

3. Use existing grid resources to integrate EV load

to maximize net benefits to all ratepayers

21

EV PBR Goals - Examples


Goal 1: Build understanding of EV charging costs, benefits and consumer savings


Goal 2: Encourage the development of EV infrastructure while controlling costs


Goal 3: Use existing grid resources to integrate EV load to max. net benefits to all ratepayers


Metrics to Measure the Effectiveness of Electric Vehicle Grid Integration

Next-Generation Performance-Based Regulation: Volume 1 (Introduction—

Global Lessons for Success)

Next-Generation Performance-Based Regulation: Volume 2 (Primer—Essential

Elements of Design and Implementation)

Next-Generation Performance-Based Regulation: Volume 3 (Innovative

Examples from Around the World)

Performance Incentives for Cost-Effective Distribution System Investments

Protecting Customers from Utility Information System and Technology Failures

25

RAP Resources

https://www.raponline.org/knowledge-center/metrics-to-measure-the-effectiveness-of-electric-vehicle-grid-integration/

https://www.raponline.org/knowledge-center/next-generation-performance-based-regulation-volume-1-introduction-global-lessons-for-success/

https://www.raponline.org/knowledge-center/next-generation-performance-based-regulation-volume-2-primer-essential-elements-of-design-and-implementation/

https://www.raponline.org/knowledge-center/next-generation-performance-based-regulation-volume-3-innovative-examples-from-around-the-world/

https://www.raponline.org/knowledge-center/performance-incentives-for-cost-effective-distribution-system-investments/

https://www.raponline.org/knowledge-center/protecting-customers-from-utility-information-system-and-technology-failures/

Megan Anderson

Associate


+1 802 498 0736

[email protected]

raponline.org

Taos, New Mexico

About RAPThe Regulatory Assistance Project (RAP)® is an independent, non-

partisan, non-governmental organization dedicated to accelerating the

transition to a clean, reliable, and efficient energy future.

Learn more about our work at raponline.org

http://www.raponline.org/


Level 2 EV Charging is a Lot Like…

27

An Electric Water Heater!


Water Heater

• 4.4 – 5.5 kW

• 2,000 – 4,000

kWh/year

• Can avoid morning and

early evening peak

charging

• Tank usually covers a

full day’s supply

28

Electric Vehicle

• 3.3 – 6.6 kW

• 2,000 – 4,000

kWh/year

• Can avoid morning

and early evening

peak charging

• Batteries likely equal

a full day’s supply

Really!


Three “Levels” of EV Charging

Level 1: Standard household current (120 Volts)

1.5 kW Adds about 4 miles range per hour

Level 2: High capacity residential circuit (240 Volts)

6.6 kW Adds about 20 miles range per hour

Level 3: Fast commercial chargers in public areas

with very large electricity connection:

Up to 350 kW Adds up to 200 miles in 15 minutes

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▪ California’s GVI Working Group Final Report: Institute

performance-based ratemaking… to encourage more

efficient EV-related distribution build-out.” 6/30/30

https://gridworks.org/initiatives/vehicle-grid-integrationwg/

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41

December 2020

Raghu Sudhakara

Performance-Based Regulation for Clean Transportation

42

Performance-Based Regulation (PBR)

Energy

Efficiency

Distributed

Energy

Non-

Traditional

Alternatives

GHG

Emissions

Reduction

Renewable

Energy

Energy

Storage

Peak

Reduction

Electric

Vehicles

Equity and

Inclusion• PBR can encourage:

• Policy achievements

• Market enablement

• Innovation and efficiency

• Enterprise-wide focus at utility

• Customer benefits

• Performance incentives drive higher

achievement, for example in energy

efficiency*

* - See American Council for an Energy-Efficient Economy – Snapshot of Energy Efficiency Performance Incentives for Electric Utilities (December 2018)

Evolution of PBR

43

Societal Value for Customers

Meaningful Opportunity for Utilities

Policy achievement smartly

EAMs at a level sufficient to motivate and drive utilities to achieve by changing behavior

EAMs’ targets at a level that requires significant effort but within the realm of achievability

EAMs are designed to boost societal benefits for customers above business-as-usual

EAMs not over-broad so that utility unable to influence result or not so narrow as to hamper innovation

EAMs that incent annually but accommodate multi-year goals recognizing practical execution realities

EAMs that change incrementally so institutional ability is built for achievement

PBR as applied through EAMs* have evolved to provide societal value and drive achievement

* - Earnings Adjustment Mechanisms, the New York approach to PBR that awards basis points on utility rate base for demonstrated policy focus area achievements

Sustained enterprise-wide focus

Innovation fast-tracking

Process re-design

Organizational design

Talent commitment

44

Con Edison Experience: EAM Fostered Utility Achievement

• Unprecedented growth in energy

efficiency and related peak savings

• After EAMs* were adopted:

• Energy efficiency achievement

tripled while costs for each MWh

of savings dropped ~25%

• Peak savings quadrupled while

costs for each MW of savings

dropped ~35%

• >$400 million of new net benefits

were created for customers

PBR To Drive Achievement in Clean Transport

45

POLICY ALIGNMENT

Drive desirable policy outcomes

Avoid conflict with other policy goals

E.g. EV Rates with Peak Reduction EAM

EXECUTION ALIGNMENT

EAM design informed by executability

EAM design driving practical efficiency

E.g. EV EAM recognizing trajectory

ATTRIBUTES

PROGRAM BASED

EAM: “Share the Savings”

Metric: 30% of savings below budget

Incentive: Up to 15 BPS

OUTCOME BASED

CURRENT EAMs

EV regulation framework should be aligned with policy objectives and execution

Appropriate Design:

• Well-defined objective

• Measurable, avoiding counterfactuals

• “Stretch” but attainable

• Stable over time

• Time based but adaptable

EAM: Beneficial Electrification

Metric: GHG Redn. by EVs, Heat Pumps

Incentive: Up to 10 BPS

Peer Discussion – Commissioners and

Commission Staff Only

Questions?

Raise your hand to ask a question or type a question

into the question box

Peer Discussion – Commissioners and

Commission Staff Only

Facilitator

EV Working Group Chair Maria Bocanegra and Illinois Commerce Commission Staff

Discussion Questions

1. How has/could the unique demographics of your jurisdictions (customer size, access to markets, etc.) potentially influence EVs

and PBR for EVs?



and PBR for EVs?

2. Which stakeholders (“usual suspects” and non-traditional) have engaged in PBR? EVs?

Have PUCs convened stakeholders (for example, conducted a workshop) on PBR and/or EVs?

What have stakeholders said?



and PBR for EVs?




3. What are the core expectations (minimum requirements) of utilities in EV adoption? How can you incentivize the utility to act

beyond minimum requirements and penalize when it has not met minimum requirements?

How does the commission ensure it is not rewarding the utility for standard operations (what it is already obligated to do

and meeting)?



and PBR for EVs?







and meeting)?

4. How might PBR for EVs impact the financial health of the utility (such as credit ratings, earned returned on equity, etc.)? What

are the impacts of PBR for EVs on the financial health of the customer and equality and equity?

What modeling should a regulator look for in both cases?



and PBR for EVs?







and meeting)?

4. How might PBR for EVs impact the financial health of the utility (such as credit ratings, earned returned on equity, etc.)? What

are the impacts of PBR for EVs on the financial health of the customer and equality and equity?

What modeling should a regulator look for in both cases?

5. What resources do your commissions use to analyze and build capacity on PBR and EVs? What experts evaluate performance

metrics?

Announcements

Registration Open for the Winter Policy Summit: February 4,5 and 8-11, 2021

Presentations and recordings of past EVSWG events

EVSWG Listserv: [email protected]

PBRSWG Listserv: [email protected]

https://www.naruc.org/meetings-and-events/naruc-winter-policy-summits/2021-winter-policy-summit/

http://www.naruc.org/cpi-1/energy-infrastructure-modernization/electric-vehicles/

mailto:[email protected]

mailto:[email protected]

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